Nigeria loses $9.1b yearly to oil thieves, others

The Society of Petroleum Engineers (SPE) Nigeria Council has said the crude oil stolen by thieves between January 2013 and April this year stood at 39.3 million barrels while an average of 250,000 barrels of oil per day (bopd) is either deferred or partly stolen through activities of pipeline vandals and thieves representing an average loss of $9.1billion per year at $100 per barrel oil price.

According to the engineers, pipeline vandalism and oil theft have led to a decline in oil production from 2.45 million (bpd) to 2.05 million bpd in the last four years (2010 – 2014).

The group also noted that the drop in crude oil earnings arising from low oil price presents an annual underfunding of $1.8 – $2.0 billion to the Federal Government. Crude oil market dislocation from the United States destination requires strategic realignment geographically to seek alternative markets in Europe and Asia to address the dip in earnings, it added.

In a communiqué produced from its 2015 annual conference and exhibition, obtained at the weekend, the group noted that with proven gas reserves of 181 trillion cubic feet (tcf), and having the ninth largest natural gas reserves in the world and largest in Africa with undiscovered potential gas reserves of about 600tcf, Nigeria should be able to comfortably meet its export and domestic requirements.

It said: “Gas production has been largely export focused with approximately 15 per cent going into domestic market. Out of approximately 4000km of gas pipeline in Nigeria, only a third is dedicated to domestic consumption.

“Gas is the future of Nigeria, the key to unlocking economic potential of Nigeria and increasing the living standards of the average Nigerian. Therefore, domestic gas development will be driven by indigenous independent companies and not the international oil companies (IOCs). Natural gas is world’s fastest growing fossil fuel with global consumption projected to increase from 118tcf in 2013 to 185tcf in 2040.

“Renewed efforts need to be made in gas discovery based on projected local gas utilization forecast and sales export to meet growing demand. Gas development with the right strategy could achieve adequate power supply by 2017. The extent of collaboration for the gas industry will determine the success of the industry. Gas to power will generate huge revenue and save money for Nigeria.

“Therefore, high development cost of gas projects and low oil price is currently unfavourable to the industry. Power distribution pricing to investors must be conducive for investors to improve the power sector and regulatory framework alone is not sufficient to address the gaps in Nigerian Gas Supply.”